Tennessee Businessman Pleads Guilty to Stock Fraud Scheme

Tennessee Businessman Pleads Guilty to Stock Fraud Scheme

BOSTON—A Tennessee businessman pleaded guilty today in U.S. District Court in Boston to defrauding investors in connection with the fraudulent sale of millions of dollars of stock in a medical technology company.

From 2010 to 2013, Gunn, an information technology expert, sold stock in CareXGen, whose principal asset was a patent for a system, he claimed to have designed, that would facilitate the electronic exchange of health information. To lure investors, Gunn repeatedly misrepresented CareXGen’s profitability and how investors’ money would be used. He also represented to investors that CareXGen had large contracts lined up worth millions of dollars. In fact, CareXGen did not have any major contracts and Gunn spent over $1 million of victim investors’ money on himself, his wife and his former girlfriend.

The charging statute provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Stephen Heymann of Ortiz’s Economic Crimes Unit.